Stock market analysis and technicals

Dollar Index

Gold fell back below $1300 and headed south towards the support area of $1279-$1281 as the sharp breakout above $1300 was a false one which attracted more short positions than long also supported by upmove in the dollar index which looks to have bottomed out. This poses caution to gold prices as a slight uptick in dollar index creates much impact on the yellow metal on the downside. Gold is currently directionless with prices expected to move sideways unless a course is chosen.

On the chart –

Gold erased all the gains of the previous week ending from where it had started. This U-turn from $1300 was account of a stronger dollar index and now less impacting Korean peninsula news flow. Gold is split between bulls and bears but has a slightly negative approach when it comes to prices. We have 2 scenarios –

1. Gold took support at $1279-$1281 area, and if this is held gold can move higher which is uncertain since there is nothing fundamental to support the rise in prices. If the support is held, gold can rise to $1291. If this is crossed it can head higher to the very crucial area of $1297 which is a decider for further price action. And if this is taken out, prices can head north to $1317.

2. Gold lost the $1300 mark with ease which certainly sounds bearish. If the current trend prevails gold can fall to $1271 where gold may find some support. If this support is broken it can head back lower to $1261 where it had bottomed out. There is a chance gold might see further slide if $1261 is breached.

Bullish view – Only thing giving support to bulls is the price took support at $1279-$1281 area and rebounded from lows. Bullishness was erased by incremental fall in prices on daily basis. The way out for bulls is they need to hold this support to keep the green in gold prices. Gold will remain sideways unless a path is chosen.

Bearish view – Bears returned to the party with a flair as they kept eroding the prices from $1300 to the lows of $1280. Such price action definitely suggests confusion where one week is up and other down. Bears successfully broke through multiple supports signaling lack of buying and a change in trend. With such movement, prices may fall further to retest the bottom it created 2 weeks before.

On larger terms, Gold remains sideways with a negative bias. Prices are expected to be range bound unless a direction is decided.

Possible trades are on both sides, Gold can be bought above $1284 for the targets of $1291 and $1297 with a stop loss placed below $1271. Longer term target $1317. Gold can be sold under $1279 for the targets of $1271 and $1261 with a stop loss placed above $1291.

Gold gained for 3rd consecutive week on account of a Dovish Fed outcome which resulted in lower dollar index thus fueling the gold price. Gold managed to post a decent weekly gain of over $13 which was on the expected lines since a pattern was in the formation as shown in Gold’s weekly outlook: July 24-28. The crucial Fib level of 61.8% acted as a resistance in the early part of the week but was taken out during the later half which does suggest continuous bullishness. Gold is now on track to touch its highs of $1297.

On the chart –

Gold took out the retracement level of 61.8% on closing basis with a good margin which puts bullishness firmly on the table. With such a closing, its expected to go higher to its highs of $1296-$1298 where it may find good resistance as it will form a triple top. With the Fed meeting out of the way, gold can move steadily without much volatility. With pattern near completion we have 2 scenarios –

1. Gold broke through the levels of Fib which now suggests a move even more higher to $1296-$1298 zone. This move was largely on the weakened dollar index which was trading at fresh lows. With such fundamentals aiding gold, it is expected to move higher to $1271 (A) which is a trough area for the yellow metal. If gold is able to cross this area it will see more upside to $1278 (B) which is a fairly good resistance on the chart. If this resistance level is taken out, gold can head higher to $1297 (C) where its expected to see a lot of resistance on account of formation of triple top.

2. Gold is clearly in an uptrend so taking a short call is on the contra side but it is still possible if gold moves lower after completing the pattern though such a move is less likely given the breakout seen. Gold can move lower to $1251 (1) if it slides below the Fib level of 61.8% which is near $1261-$1263. If this area is taken out gold can fall further to $1241 (2) which is a good support area. If this support zone is breached gold can tumble down to $1224 (3).

Bullish view – Bulls are in the charge for the 3rd consecutive week as the price heads higher now trading in the upper part of the bollinger band which suggests continued uptrend which should last till it hits the highest point on the band. Breakout of technical levels and Fed’s dovish stance gives more impetus to gold for moving higher and maybe create a new high in the coming days/weeks. Gold is expected to register a high of $1297 or more given the scenarios which is extremely positive for the metal.

There is nothing worth mentioning on the bearish side since everything is pointing towards bullishness. This can change only if prices start to trade below $1261-$1263 which is unlikely.

On larger terms, Gold is in a strong bullish grip as the dollar index is continuously trading at new lows. Prices are expected to move higher towards $1296-$1298.

Possible trades are on both sides but largely on the upside, Gold can be bought above $1271 for the targets of $1278 and $1297 with a stop loss placed below $1261. Longer term target $1305. A buy on dips is also suggested till $1261 with a stop loss placed below $1251.Short trades are unlikely until $1261 is breached. Gold can be sold below $1261 for the targets of $1251 and $1241 with a stop loss placed above $1271. Longer term target $1224.

Gold saw a rise of more than $25 in the week owing to a weakening dollar index due to poor data coming from America and heightened risks in the global equities due to very high indices which seems to be overbought. The rally was more on the back of technical grounds after it bottomed out near $1200, now retracing back according to Fib levels. If gold manages to take out a crucial Fib level of 61.8, it can head higher to its highs of $1297. Another thing to look out in the week is the upcoming monthly Fed meet over interest rate decision.

On the charts –

Gold made another dash towards its retracement levels which it crossed above the 50% mark to close at $1254. Now its expected to head higher to 61.8% levels from where a possible change in direction might be on the cards if it fails to take it out. Gold is trading well into its range circle and now a pattern (2 black lines) looks to be completed in upcoming days. There are 2 scenarios taking into the Fed meeting in account –

1. Gold broke above the 50% mark of Fib levels which is suggesting more upside as other factors are also aiding the uptrend like a weakened dollar index. If this move continues gold can head higher to $1261 (A) which is a good resistance (red line) as its very near to the 61.8% level. If this area is taken out, gold can climb even higher to $1275 (B) where it found some more resistance as seen in the earlier weeks. Now if this multiple resistance zone is conquered gold can see more upside to its highs of $1297 (C) where it may find some selling pressure as it will form a triple top.

2. Gold is clearly on the breakout on upside but the Fed meeting outcome might change that. If a hawkish statement is out which is very less likely gold can slide towards $1237 (1). If this level is broken gold might fall lower to $1217 (2) which is a good support area (green line). And if this support zone gives way gold may sulk back to its lows of $1204 (3) from where the prices rebounded.

Bullish view – Bulls were back on the winning ways for the 2nd consecutive week as poor data and risks increased the demand for gold. Aiding the bulls is the technical breakout over 50% Fib levels which should result in expansion to 61.8% and also the fact that a pattern (black lines) is on the formation spree which has a high of $1275. Gold also is expected to take ques from Fed outcome which had already given a dovish statement in earlier weeks on its rate hike programme which again is bullish for gold. Gold is expected to move higher on both technical as well as fundamental grounds.

There is nothing bearish worth mentioning apart from any change in stance of the Fed over its rate hike pitch which may alter the course for gold but it is less likely since the Fed has already expressed its dovish views. And gold will turn bearish only if the Fib level of 61.8% is respected and it reverses from there.

On larger terms, Gold remains bullish as the dollar index is still trading at new lows with the prices expected to head north to $1269-$1275.

Possible trades are on both sides but largely on the upside, Gold can be bought above $1254 for the targets of $1261 and $1275 with a stop loss placed below $1244. Longer term target $1297. Gold can also be bought on dips with a stop loss placed below $1237.Short trades are unlikely but still gold can be sold below $1241 for targets of $1237 and $1217 with a stop loss placed above $1251. Longer term target $1204.

Gold rose over $15 in the past week recovering from a massive fall as it rebounded from its long term support area. This rally was largely on back of dismal data coming from America which pushed the dollar index to new lows thus pulling up the yellow metal prices. Gold climbed back into its trading range of $1215-$1297 but still remains in the uncharted waters as shown in the chart below. Weekly chart is indecisive but current move favors more upside than downside as dollar index broke the support on the monthly chart.

On the chart –

Gold’s price action was on expected grounds as it took support on the edge of the bearish circle and rose till the edge of the bullish circle which was highly likely if the support was not breached. But such a move which is still outside both circles doesn’t give clear indication of further price movement. Circles denote the trading ranges, green one is the bullish circle while the red one is the bearish circle. We have 2 scenarios –

1. Gold climbed back into the trading range which suggests more upside till it remains in it but for confirmation gold needs to trade above the black trendline which it resisted in the past week and move into the green circle as shown in the chart. If gold breaks this resistance then it can move higher to $1241 (A). If this price point is crossed gold can move further up to $1248 (B) which is a fairly good resistance. If this area is conquered gold can race up to $1269 (C) which is again a good resistance on the chart and it may alter the direction of the gold if this price point is not crossed. And if this crucial resistance is crossed gold can move higher to $1281 (D).

2. Gold’s move can be considered as a relief rally as it fell too much in less time. And the rejection at the resistance on the edge of the circle and also the black trendline suggests gold may again resume its downtrend. If the rally fails gold can slide back to $1217 (1). This is a good support and bottom of the bullish circle, if this fails to hold gold can move lower to $1204 (2) which is a long term support area for the metal on all time frames on the chart. If this crucial price point is breached gold can slide lower to $1184 (3). And if here also the price fails to change course it may fall further to $1169 (4).

Bullish view – Bulls were on the charge in the week as the price moved higher from the lows of $1204 to the highs of $1232 on account of a weaker dollar index and lower level buying since the ever crucial support area was not breached. According the Fib retracement gold should move higher which will give more consolation to the bulls. As per the technical indicators gold is expected to move higher towards $1248-$1251.

Bearish view – Bears took a breather as gold rallied from the lows which is broadly considered as a relief rally since no decisive moves can be identified since gold is in uncharted waters between the 2 circles. Rejection on the edge of the bullish circle indicates continued bearishness which is also confirmed by the black trend line which was not crossed on closing basis. If this rejection at higher levels continues gold can fall back into the bearish circle which will erode the prices to $1184 and lower.

On larger terms, Gold is neutral with a mild positive bias since the dollar index is trading at fresh lows. Prices are expected to be sideways until either of the trading ranges are broken into. Current setup favors a break into the bullish circle.

Possible trades are on both sides, Gold can be bought above $1234 for the targets of $1241 and $1248 with a stop loss placed below $1217. Longer term target $1269 and $1281.Gold can be sold under $1221 for the targets of $1217 and $1204 with a stop loss placed above $1234. Longer term target $1184 and $1169.

Gold in this week gained over $22 to close at $1196 on account of a weaker dollar and uncertainties still mounting over policies which U.S president elect Donald Trump might take upon next week when he joins office from 20th.

Gold remains bullish and is poised for more upmove considering the safe haven buying which has spurred to shield from the cloud of uncertainties in the coming weeks.

Technically gold closed higher breaking the long term trend line resistance of $1174 on the weekly chart.On the higher side, chart shows a resistance at $1228 which is also confirmed by the parallel long term trend line.
Gold can be bought for the target of $1225-$1228 and even higher for the coming week.
It can go higher to $1248 which is its next key resistance on the chart
For positional traders stop loss can be placed around $1182.

Gold retreated from seven week highs of $1204 on Friday as U.S dollar gained some strength back, but continued political uncertainties in U.S supported the yellow metal demand.
Dollar found some demand after comments made by Federal Reserve Chair Janet Yellen on U.S economy and labor market looking strong.
But the dollar still remained under pressure post President Elect Donald Trump’s conference where he failed to offer details on his promises to boost fiscal spending and cut taxes.
Gold found support at $1187.5 before rebounding towards $1196.

Uncertainty is at paramount level enveloping the global financial markets with a thick cloud over the future course of stability and growth. Many economic and political events are lined up in this year which are causing more unrest among the investors raising concerns over the short medium term outlook of the equity/commodity markets for returns as well as investment opportunities.

Gold which is, perhaps now can be regarded as the second best option to fight uncertainty has been on the rise since 2017 started, but here lies a key confusing element of price movement when compared to dollar which is still hovering near its all time highs but yet the gold demand seems to spur and the prices are going northwards irrespective of the higher dollar. This move defines the markets have digested the stronger dollar and thus its making low to no impact on the Yellow metal as well as other dollar denominated commodities.

Dollar which has been on a tear since the last U.S Federal policy which increased the interest rate pushing the dollar index to all time highs is having no clear impact on either metals,oil or equities rather these three are pushing higher. Dollar is regarded as the safe haven in today’s scenario but the appeal though attracting investments, it is still not much conclusive seeing the price movement of Gold and other precious metals although another 5% rise will definitely change the perspective which is lingering at the moment.An argument is still on that prices of precious metals may not increase much if the dollar remains strong which it will seeing the incoming turbulence in the coming months.

Current scenario is suggesting large funds are flowing into Japan , America , Europe whereas the emerging markets are actually seeing a sell off.Indian market is battling with its own set of problems caused due to demonetization and the road ahead with the yearly budget round the corner.

Trades are a bit tricky as there is a chance to get chopped on either side that is get trapped on either of the call of going long or short given the unorthodox price movements.Gold can be bought on dips as the price might not see the lows due to the rise in global uncertainty and the lined-up political events in this year.
U.S Fed has pointed out at 3 rate hikes in the current year this weekend which might lead to even more stronger dollar though it is facing resistance at higher levels.

Gold prices today gained in Asian trading hours rebounding from recent lows which was a result of Hawkish commentary by the Fed more than the rate hike. A persistent stronger U.S dollar index is still capping the positive movement in the yellow metal.
Gold is trading a 0.48% or $5.45 higher with silver following up with a 1.28% or $0.205 gain.
Gold prices had fallen overnight to settle at 10 month lows on account of risk on trades in developed markets across the globe.
Demand for the yellow metal has fallen in India due to liquidity crisis caused by demonetization drive who is one of the largest importer of physical gold.

Last night Federal Reserve of America hiked the interest rate by quarter of a percentage point as expected along with a strong hawkish commentary. A 3 time rise of interest rate in the next year and similar pattern till 2019 was the forecast by the Fed which sent the equity as well as the commodity markets spiraling down with Dollar index the key beneficiary gaining over 1%.
Since morning yet again the dollar index is gaining momentum as the day progresses with a hike of 0.43% at 102.47 last checked during the opening hour of European trading session.

Now what lies in store along the path with a Higher Dollar index? its precious metals as well as emerging markets which are feeling the heat of a stronger dollar with Asian markets closing in red with substantial cuts excepting Japan which traded higher on account of a weaker yen, India trading almost flat and European markets trading modestly higher with a positive bias, also American index futures showing a hint of green too.

This suggests fund flows into Developed markets rather than Emerging markets, which was earlier vice versa in this year with EMs getting most of the attraction around the globe.

Dollar index technically has room for more upside with gains possibly facing resistance around 102.81 level according to the bullish trend line where as a breakout above this level opens up the corridor towards 104 mark.

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